2016 -- H 7067

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LC003426

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2016

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A N   A C T

RELATING TO EDUCATION -- MUNICIPAL FUNDING OF CHARTER SCHOOLS

     Introduced By: Representatives Barros, Coughlin, Blazejewski, Johnston, and Abney

     Date Introduced: January 07, 2016

     Referred To: House Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Sections 16-2-9.4 and 16-2-21 of the General Laws in Chapter 16-2 entitled

"School Committees and Superintendents [See Title 16 Chapter 97 - The Rhode Island Board of

Education Act]" are hereby amended to read as follows:

     16-2-9.4. School district accounting compliance. -- (a) The office of auditor general

and the department of elementary and secondary education shall promulgate a uniform system of

accounting, including a chart of accounts based on the recommendations of the advisory council

on school finance, and require all accounts of the school districts, regional school districts, state

schools, and charter schools to be kept in accordance therewith; provided, that in any case in

which the uniform system of accounting is not practicable, the office of auditor general, in

conjunction with the department of elementary and secondary education, shall determine the

manner in which the accounts shall be kept. The uniform system of accounting shall also include

a standardized budget process to ensure districts can annually assess investment priorities and

incorporate long-range planning.

      (b) For the purpose of securing a uniform system of accounting and a chart of accounts

the advisory council on school finances, as defined in § 16-2-9.2 may make such surveys of the

operation of any school districts, regional school district, state school, or charter school as they

shall deem necessary.

      (c) Upon completion of the implementation of the uniform chart of accounts, all the

school districts, regional school districts, state schools, and/or charter schools, shall implement a

regents-approved budget model, that shall include a distinct line item for payments to charter

schools and use best practices established by the department of education for long-range

planning, budget development, and budget administration and reporting.

      (d) If any school district, regional school district, state school, or charter school fails to

install and maintain the uniform system of accounting, including a chart of accounts and

approved budget model, or fails to keep its accounts and interdepartmental records, or refuses or

neglects to make the reports and to furnish the information in accordance with the method

prescribed by the office of auditor general and the department of education, or hinders or prevents

the examination of accounts and financial records, the auditor general and the commissioner of

education, and/or their respective designee(s), shall make a report to the superintendent of schools

of the local education agency, the school committee chairperson, the mayor or town manager, and

the president of the town council, and/or for a charter school, to the board of trustees or directors,

as applicable, in writing, specifying the nature and extent of the failure, refusal, neglect,

hindrance, or prevention, and the commissioner is hereby authorized and directed to review the

matter so reported. If the commissioner shall find that failure, refusal, neglect, hindrance, or

prevention exists and that the school district, regional school district, state school, or charter

school should properly comply in the matter so reported, the commissioner shall direct the school

district, regional school district, state school, or charter school, in writing, to so comply. If the

failure, refusal, neglect, hindrance, or prevention shall continue for a period of ten (10) days

following the written direction, the commissioner may request the board of education for

approval to withhold distribution of state aid to said school district, regional school district, state

school, or charter school. The board shall hold a hearing and provide the subject school and/or

district notice and an opportunity to be heard at said hearing. After hearing thereon, the board

may authorize the commissioner to withhold the distribution of state aid to said school district,

regional school district, state school, or charter school, if the board determines such sanction is

appropriate.

      (e) The department of elementary and secondary education, in consultation with the

division of municipal finance, shall conduct periodic reviews and analysis of school revenues and

expenses. The department shall also review and monitor compliance with the approved budget

model and best practices. The department shall identify those local education agencies considered

to be at risk of a year-end deficit or a structural deficit that could impact future years. Such

potential deficits shall be identified based on the periodic reviews, which may also include on-site

visits and reporting in accordance with the provisions of § 45-12-22.2. Potential deficits shall be

reported to the office of municipal finance, office of auditor general, superintendent, chairman of

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the school committee, mayor or town manager, and the president of the town council, of the

applicable school district, regional school district, or state school, and/or for a charter school, to

the board of trustees or directors, as applicable.

     16-2-21. Pre-budget consultation -- Annual reports -- Appropriation requests --

Budgets. -- (a) At least sixty (60) days, but not more than ninety (90) days, prior to the formal

submission of the school budget to the appropriate city or town officials by the school committee,

there shall be a joint, pre-budget meeting between the school committee and the city or town

council(s). At or before this meeting:

      (1) The highest elected official of the city or town shall submit to the school committee

an estimate, prepared in a manner approved by the department of administration, of projected

revenues for the next fiscal year. In the case of the property tax, the projections shall include only

changes in the property tax base, not property tax rates;

      (2) The school committee shall submit to the city or town council a statement for the

next ensuing fiscal year of anticipated total expenditures, projected enrollments with resultant

staff and facility requirements, estimated enrollment and payments to charter schools, and any

necessary or mandated changes in school programs or operations; and

      (3) The school committee shall prepare and submit, annually, to the department of

elementary and secondary education, on or before the first day of August, a report in the manner

and form prescribed by the state board of regents for elementary and secondary education; the

committee shall also prepare, not less than thirty (30) days before the date of the annual financial

town meeting, or the date of the meeting of the city council at which annual appropriations are

made, on forms prescribed and furnished by the department of elementary and secondary

education, the estimates and recommendations of the amounts necessary to be appropriated for

the support of public schools, including a distinct line item for estimated payments to charter

schools for the fiscal year ensuing; provided, that a copy of these estimates and recommendations

shall be sent to the department of elementary and secondary education, and until the report is

made, and if the estimates and recommendations are not presented to the department, it may

refuse to draw its orders for the money in the state treasury apportioned to the city or town;

provided, that the necessary blank for the report has been furnished by the department on or

before the first day of June, next preceding, and the necessary forms for the estimates and

recommendations shall have been furnished by the department not less than sixty (60) days before

the date of the annual appropriations meeting of the city council. The committee shall also

prepare and submit annually to the department of elementary and secondary education and at the

annual financial town meeting, a report to the city or town, setting forth its doings, the state, and

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condition of the schools, and plans for their improvement, which report, unless printed, shall be

read in open meeting; and if printed, at least three (3) copies shall be transmitted to the

department on or before the day of the annual financial town meeting in each year.

      (b) If the amount appropriated by the town meeting, the city or town council, or budget

referendum is either more or less than the amount recommended and requested by the school

committee, the school committee shall, within thirty (30) days after the appropriation is made,

amend its estimates and recommendations so that expenses are no greater than the total of all

revenue appropriated by the state or town or provided for public schools under the care, control,

and management of the school committee.

      (c) Only a school budget in which total expenses are less than, or equal to, appropriations

and revenues shall be considered an adopted school budget.

      (d) Notwithstanding any provision of the general or public laws to the contrary:

      (i) The budget adopted and presented by any school committee for the fiscal year 2008

shall not propose the appropriation of municipal funds (exclusive of state and federal aid) in

excess of one hundred five and one-quarter percent (105.25%) of the total of municipal funds

appropriated by the city or town council for school purposes for fiscal year 2007;

      (ii) The budget adopted and presented by any school committee for the fiscal year 2009

shall not propose the appropriation of municipal funds (exclusive of state and federal aid) in

excess of one hundred five percent (105%) of the total of municipal funds appropriated by the

city or town council for school purposes for fiscal year 2008;

      (iii) The budget adopted and presented by any school committee for the fiscal year 2010

shall not propose the appropriation of municipal funds (exclusive of state and federal aid) in

excess of one hundred four and three-quarters percent (104.75%) of the total of municipal funds

appropriated by the city or town council for school purposes for fiscal year 2009;

      (iv) The budget adopted and presented by any school committee for the fiscal year 2011

shall not propose the appropriation of municipal funds (exclusive of state and federal aid) in

excess of one hundred four and one-half percent (104.5%) of the total of municipal funds

appropriated by the city or town council for school purposes for fiscal year 2010;

      (v) The budget adopted and presented by any school committee for the fiscal year 2012

shall not propose the appropriation of municipal funds (exclusive of state and federal aid) in

excess of one hundred four and one-quarter percent (104.25%) of the total of municipal funds

appropriated by the city or town council for school purposes for fiscal year 2011; and

      (vi) The budget adopted and presented by any school committee for the fiscal year 2013

and for each fiscal year thereafter shall not propose the appropriation of municipal funds

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(exclusive of state and federal aid) in excess of one hundred four percent (104%) of the total of

municipal funds appropriated by the city or town council for school purposes for the previous

fiscal year.

      (e) Notwithstanding any provision of the general or public laws to the contrary, any

judgment rendered pursuant to § 16-2-21.4(b) shall consider the percentage caps on school

district budgets set forth in subsection (d) of this section.

     SECTION 2. Section 16-7-20 of the General Laws in Chapter 16-7 entitled "Foundation

Level School Support [See Title 16 Chapter 97 - The Rhode Island Board Of Education Act]" is

hereby amended to read as follows:

     16-7-20. Determination of state's share. -- (a) For each community the state's share

shall be computed as follows: Let

     R = state share ratio for the community.

     v = adjusted equalized weighted assessed valuation for the community, as defined in §

16-7-21(3).

     V = sum of the values of v for all communities.

     m = average daily membership of pupils in the community as defined in § 16-7-22(3).

M = total average daily membership of pupils in the state.

     E = approved reimbursable expenditures for the community for the reference year minus

the excess costs of special education, tuitions, federal and state receipts, and other income.

     Then the state share entitlement for the community shall be RE where R = 1 -

0.5vM/(Vm) through June 30, 2011, and R = 1 - 0.475 vM/(Vm) beginning on July 1, 2011 and

thereafter.

     Except that in no case shall R be less than zero percent (0%).

     (b) Whenever any funds are appropriated for educational purposes, the funds shall be

used for educational purposes only and all state funds appropriated for educational purposes must

be used to supplement any and all money allocated by a city or town for educational purposes and

in no event shall state funds be used to supplant, directly or indirectly, any money allocated by a

city or town for educational purposes except concerning state funding of charter schools. The

courts of this state shall enforce this section by writ of mandamus.

     (c) Notwithstanding the calculations in subsection (a), the hospital school at the Hasbro

Children's Hospital shall be reimbursed one hundred percent (100%) of all expenditures approved

by the board of regents for elementary and secondary education in accordance with currently

existing rules and regulations for administering state aid, and subject to annual appropriations by

the general assembly including, but not limited to, expenditures for educational personnel,

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supplies, and materials in the prior fiscal year.

     SECTION 3. Section 16-7.2-5 of the General Laws in Chapter 16-7.2 entitled "The

Education Equity and Property Tax Relief Act" is hereby amended to read as follows:

     16-7.2-5. Charter public schools, the William M. Davies, Jr. Career and Technical

High School, and the Metropolitan Regional Career and Technical Center. -- (a) Charter

public schools defined in chapter 77 of this title, the William M. Davies, Jr. Career and Technical

High School (Davies) and the Metropolitan Regional Career and Technical Center (the Met

Center) shall be funded pursuant to § 16-7.2-3. If the October 1 actual enrollment data for any

charter public school shows a ten percent (10%) or greater change from the prior year enrollment

which is used as the reference year average daily membership, the third and fourth quarter

payments to the charter public school will be adjusted to reflect actual enrollment. The state share

of the permanent foundation education aid shall be paid by the state directly to the charter public

schools, Davies, and the Met Center pursuant to § 16-7.2-9 and shall be calculated using the state

share ratio of the district of residence of the student as set forth in § 16-7.2-4. The department of

elementary and secondary education shall provide the general assembly with the calculation of

the state share of permanent foundation education aid for charter public schools delineated by

school district. The department shall also provide the general assembly a performance dashboard

indicating the per-pupil expenditures of each school district and charter school broken down by

revenue sources and expenditure categories. The department shall provide, within the same

dashboard, student performance indicators for each school district or charter school. The local

share of education funding, as defined by the department of elementary and secondary education

and approved by the General Assembly, shall be paid to the charter public school, Davies, and the

Met Center by the district of residence of the student and shall be the local per-pupil cost

calculated by dividing the local appropriation to education from property taxes, net of debt

service and capital projects, as defined in the uniform chart of accounts by the average daily

membership for each city and town, pursuant to § 16-7-22, for the reference year.

      (b) Local district payments to charter public schools, Davies, and the Met Center for

each district's students enrolled in these schools shall be made on a quarterly basis in July,

October, January and April; however, the first local district payment shall be made by August 15

instead of July. Failure of the community to make the local district payment for its student(s)

enrolled in a charter public school, Davies, and/or the Met Center may result in the withholding

of state education aid pursuant to § 16-7-31.

     SECTION 4. Sections 16-77.1-1 and 16-77.1-2 of the General Laws in Chapter 16-77.1

entitled "Funding of Charter Public Schools [See Title 16 Chapter 97 - The Rhode Island Board

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of Education Act]" are hereby amended to read as follows:

     16-77.1-1. Statement of purpose. -- The purpose of this chapter is to provide a for state

funding mechanism through which of the costs for charter public schools will be shared between

the state and the local school districts sending students to a charter public school.

     16-77.1-2. Operating costs. –State's contribution. -- (a) Operating costs of a charter

public school shall be the total of the per pupil payments for each student attending the charter

public school. The per pupil payment for each student shall be determined based on the per pupil

cost for the district of residence of each student. The state's share of the per pupil amount

contribution for each student attending the charter public school shall be calculated under chapter

7.2 of this title and shall be paid by the state directly to the charter public school and shall be the

percent, or share ratio, previously calculated under chapter 7 of this title; provided, that in no case

shall the ratio be less than thirty percent (30%), minus the five percent (5%) of per pupil cost

designated for indirect cost support to the student's school district as defined in subsection (b).

The five percent (5%) indirect cost amount shall be deducted from the district per pupil cost

before the state share is derived by applying the share ratio to the district per pupil cost. The local

share of the per pupil amount for each student attending the charter public school shall be paid to

the charter public school by the district of residence of the student and shall be the per pupil cost

for the district of residence of the student minus the state share of that per pupil cost as designated

in this section.

      (b) In addition to all state aid to education paid to a local district pursuant to chapter 7.1

of this title, the state will pay an additional amount to the district for each student from this

district who is attending a charter public school. The additional amount of state aid per pupil shall

be five percent (5%) of the districts per pupil cost. The additional state aid shall be for the

purpose of assisting local school districts to undertake the indirect costs borne by a district when

its student attends a charter public school.

      (c) The state department of elementary and secondary education shall annually determine

both the state and local share of each charter public school's operating costs by deriving the

respective shares associated with each student reported as a member of the charter public school

as of June 30 of the reference year as defined in § 16-7-16(11) (or the enrollment as of October 1

of the current school year in the first year of operation of a charter school). All other data used in

this determination shall be based upon the reference year as defined in § 16-7-16(11).

      (d) The state shall make payments of its share of operating costs its contribution to each

charter public school on a quarterly basis in July, October, January, and April. The July and

October payments will be based upon the reported student membership of the charter public

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school as of June 30 of the reference year as defined in § 16-7-16(11) (or the enrollment as of

October 1 of the current school year in the first year of operation of a charter school). Charter

public schools will report current student enrollment, including district of residence for school

purposes of each student enrolled, and each district will report current total district operating

expenses and total district enrollments (including district students enrolled in charter public

schools) annually by October 1. If the October 1 data on a charter public school's student

enrollment show a ten percent (10%) or greater increase or decrease in students from the June

membership count, the third and fourth quarter payments to the charter public school will be

adjusted to reflect actual student enrollment in the charter public school.

      (e) Local district payments to charter public schools for each district's students enrolled

in the charter public school shall also be made quarterly as designated in subsection (d); the first

local district payment shall be made by August 15 instead of July. Any local school district more

than thirty (30) days in arrears on a quarterly payment for its student(s) enrolled in a charter

public school shall have the amount of the arrearage deducted from state aid to that district and

the withheld arrearage shall be paid by the state directly to the charter public school.

      (f) Local school districts with student(s) enrolled in a charter public school shall continue

to report these students in the total census of district public school students and will receive state

aid for all these students pursuant to the provisions of chapter 7.1 of this title.

      (g) All entitlements except those provided for in § 16-24-6.2 shall be ratably reduced if

less than one hundred percent (100%) of the expenditures is appropriated.

      (h) For fiscal year 2007, the indirect aid paid to districts pursuant to this section shall

equal the amount received in the fiscal year 2006 enacted budget by the 2005 general assembly.

     SECTION 5. This act shall take effect on July 1, 2017.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO EDUCATION -- MUNICIPAL FUNDING OF CHARTER SCHOOLS

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     This act would eliminate a city or town's financial obligation to contribute to their

resident students who enroll in charter schools, William M. Davies, Jr. Career and Technical High

School or the Metropolitan Regional Career and Technical Center.

     This act would take effect on July 1, 2017.

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